Worst May for Dow since 1940
U.S. stocks slid, capping the worst May for the Dow Jones Industrial Average since 1940, as a downgrade of Spain’s debt spurred concern the European credit crisis will worsen and energy shares sank on President Barack Obama’s moratorium on new deepwater drilling permits.
Wells Fargo & Co., Bank of America Corp., American International Group Inc. and JPMorgan Chase & Co. fell more than 2% each after Fitch Ratings stripped Spain of its AAA credit rating. Baker Hughes Inc., Halliburton Co. and Schlumberger Ltd. fell more than 6% after Obama canceled pending lease sales in the Gulf of Mexico as work continued to plug BP PLC’s oil spill.
« The credit issues are not going away in Europe — it’s a simple fact that everyone has to accept, » said David Kovacs, head of quantitative strategies at Turner Investment Partners, which manages US$18-billion in Berwyn, Penn. « Credit markets are seizing up because investors are concerned. So when they see further downgrades by the credit agencies it reminds them that these issues are not going away and on a Friday before a long weekend you can expect selling off of equities. »
Fitch Ratings downgraded Spain’s credit rating one step to AA+ from AAA as the country struggles to cut debt amid a fiscal crisis.